Former SEC official John Reed Stark said Tether has no legal framework guiding its operations in the United States.

John Reed Stark, a former official with the Securities and Exchange Commission (SEC), urged financial regulators in the United States to prohibit cryptocurrency companies from offering Tether USDT, describing the company as a “mammoth house of cards.”

To emphasize his point, Stark addressed a number of Tether-related issues in a lengthy Twitter post on May 9. He claims that his years of experience as well as his research into markets and financial statements have led him to believe that the stablecoin issuer might be the next thing to fall.

Tether operates in a regulatory vacuum

Unmistakable noticed that Tie has worked without an administrative limitation as it has no lawful structure directing its tasks in the U.S. He added that there are no “U.S. prerequisites on how stores should be contributed, nor any necessities for reviews or announcing.”

“Tether’s fundamental business, the essence of everything Tether does, is tied exclusively to Tether’s financial reserves. Yet those reserves remain unaudited, unconfirmed and therefore dubious,” he added.

According to him, this is a red flag as Tether users are left to deal with its “condescending and ineffective public relations blather, hype and bluster.”

Questions about Tether’s attestation

Tether’s attestation was criticized by Stark, who stated that it cannot replace an audit. He says that attestations only look at whether the data presented is accurate at the time, whereas audits are made to look for potential risks.

Stark said:

“Under any circumstance, an attestation is not the same thing as an audit — and this kind of ‘unverified snapshot’ would never pass any sort of regulatory muster.”

Other than that, the stablecoin backer was not generally legitimately expected to present its stores authentications. This indicates that the business may not provide any additional attestations, raising additional concerns regarding its reserves.

Meanwhile, Tether’s most recent attestation report was released earlier today, revealing a $1.5 billion net profit for the first quarter of the year.

“If Tether’s internal controls are so lacking that an immediate accounting of its financial reserves – to the penny – cannot be done with the click of a mouse, that speaks volumes as to Tether’s reliability and credibility.”

Obvious further asked why Tie’s Main Innovation Official Paolo Ardonio continually talked about the organization’s monetary circumstances and not its CFO.

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Calls for ban

Stark urged the United States to follow Ontario, Canada’s lead and prohibit crypto platforms from selling Tether USDT.

Crypto.com delisted USDT earlier this year in order to comply with regulatory requirements.

In the meantime, Tether has been the subject of inquiries regarding its operations and reserves before. The stablecoin guarantor has reliably kept up with that its business was overseen accurately and had no openness to any battling crypto firms.

The USDT token issued by Tether remains the largest stablecoin in spite of these issues. It has a market cap of $82.53 billion and a 24-hour volume of $24.18 billion.